Peace Arch, ContentFilm Deal Off

TORONTO/LONDON, March 6:
Three months after the two companies signed a letter of intent, the proposed deal for Peace Arch Entertainment
Group to acquire ContentFilm, the parent company of Fireworks International, is
off.

A statement from Jeff
Sagansky, the CEO of Peace Arch, said: "ContentFilm is an innovative
entertainment company with an attractive business model and a strong management
team, but given both the turmoil in the credit markets and market conditions in
general we have decided not to make an offer to purchase the company. Peace
Arch will continue to explore strategic acquisitions that can have a big impact
on our ongoing mission of building library and distribution assets that create
value for our shareholders.”

ContentFilm, meanwhile,
today announced the completion of its strategic review, announced in March 2007
when its largest shareholder, Syntek Capital, said it wanted its sell its
stake; the Peace Arch offer followed in December. Since then, ContentFilm says
that a fall in Peace Arch’s share price has “made the proposed share exchange
ratio unfavorable” to its shareholders. ContentFilm also cited difficult capital
markets and delays in the completion of Peace Arch’s audit. In addition,
ContentFilm notes the gains its businesses, including the acquisition of the
CBC library, and is projecting strong growth in 2009. “The Board believes that
given the strong prospects for the company, shareholders’ best interests would
be served by the company remaining as an independent entity. The Board has
therefore decided to conclude its strategic review with immediate effect. For
the avoidance of doubt, the Board confirms that it is no longer in talks with
any other parties regarding a potential offer for the company.”

Syntek says it has no
intention to liquidate its shareholding at this time.

Commenting on
developments, John Schmidt, the CEO of ContentFilm, said, “We are pleased that Syntek is supportive of the
Board’s decision to remain as an independent entity. This will allow the
company to pursue its plans for growth and increased market value. We have had
a challenging year, but we are extremely excited about the prospects for the
company. The television business has continued to thrive this year, and we have
brought two strategic deals into its operations—the acquisition of the
CBC library and the representation of the Harmony Gold library. Our digital
sales business has found its footing and is showing real results. There are
some expansion opportunities in this area that we are pursuing and that we
expect to announce to shareholders in the near future. The film sales company
has once again handled some of the top independent films of the year and we
look forward to continuing the growth of this division. Allumination has had a
disappointing year, but we are now actively pursuing alternatives that will
strengthen this division.”

—By Mansha Daswani